Canada Shares Little Changed as Gold Stocks Jump After Jobs Data

  • Jobless rate unexpectedly rose in January amid plunging crude
  • Gold, silver producers make up top 10 best performing stocks

Canadian stocks were little changed on Friday, as gold and silver producers pared earlier losses triggered by data showing the economy lost jobs last month.

The Standard & Poor’s/TSX Composite Index fell 10.51 points, or 0.1 percent, to 12,763.99 at 4 p.m. in Toronto, paring declines in the final hour of trading as raw-material shares advanced. The benchmark gauge capped a weekly drop of 0.5 percent, after posting wild swings of more than 140 index points for six straight days prior to Friday.

Canada’s equity benchmark is the best-performing developed market in the world in 2016, after being among the worst in the past year. While the S&P/TSX entered a bear market last month, the gauge rallied from a two-and-a-half year low in January to trim declines for the year. It is currently down 1.9 percent for 2016.

A report today showed Canada’s unemployment rate unexpectedly climbed to 7.2 percent from 7.1 percent in January while the number of jobs fell by 5,700. Economists surveyed by Bloomberg had projected a 6,000 increase. Alberta’s jobless rate rose to the highest since February 1996 at 7.4 percent.

“The weaker than expected decline in employment in January was a poor start to the year and provides more evidence that the economy is struggling to cope with the collapse in oil prices,” said David Madani, senior Canada economist at Capital Economics in a note to clients. “The Bank of Canada will likely have no other choice but to cut interest rates further.”

While the recently elected federal government led by Prime Minister Justin Trudeau is expected to introduce fiscal stimulus to help buffer the economy, that is not likely to have an effect until the second half of the year, and the jobless rate will increase to as high as 7.8 percent a year from now, Madani said.

Separately, data showed the U.S. economy added 151,000 jobs in January, as hourly earnings improved from year-ago figures. A further tightening of labor conditions that sparks wage gains would help assure Federal Reserve policy makers inflation will reach its goal.

Raw-materials producers jumped 2.7 percent, the most in the S&P/TSX. Goldcorp Inc. and Barrick Gold Corp. rose more than 5.1 percent as all 10 of the biggest gainers today were gold and silver producers. Spot gold climbed for a sixth day on Friday, while silver prices increased for a third day.

Industrial and technology companies contributed the biggest declines to the S&P/TSX. Bombardier Inc. dropped 8.1 percent to the lowest since 1989. The Canadian government is pushing for changes to the embattled planemaker’s dual-class share structure in exchange for financial aid, officials familiar with the plans said.

BlackBerry Ltd. dropped 3 percent, the most in three weeks, after the smartphone maker fired about 200 employees in Florida and Ontario in an effort to trim costs. Sierra Wireless Inc. sank 24 percent to a two-year low after forecasting 2016 earnings and revenue that fell short of analysts’ estimates.

Genworth MI Canada Inc., a mortgage insurer, jumped 4.5 percent to a month high after reporting fourth-quarter earnings ahead of analysts’ estimates. About half of the 240 companies listed in the S&P/TSX are scheduled to report earnings over the next two weeks.

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